Thursday, May 28, 2015

Tips to Buying Your First Home: And being successful

When I graduated college at age 22, my life changed far more than just a diploma in my hand. I became a registered nurse, I got married, I became pregnant with Elliana, and then I found myself sitting at an unusually long table signing approximately 100 pieces of paper that stated something around the lines of, "I will be a responsible individual and pay for this home." Andrew was in grad school at the time, so it was my income that we were solely basing our first home on, and an income that was only 9 months new at that time. Talk about life changes and taking on a very large financial responsibility all at the same time.

So is it safe to say that I had a few jitters sitting at that table with all these grown-ups all around me with some probably assuming that we would fail? Yes, I did. But I also sat there with confidence. Because I didn't just wake up one day and say, "Today sounds like a good day to buy a house." In fact, it's far more complicated than that. The preparations, the planning process, and the steps that needed to be taken in order to get to that place: to that table.

Here are some basic tips when thinking about buying a home:

1. Look at what you can afford. Really, look. Take a look at what you bring home and what you pay every month in regards to bills. A common rule of thumb that I have heard is to look at homes that are 2.5 times your annual salary. I'm going to challenge you to actually make a spreadsheet and look a little deeper. For some, they have higher student loans than others {some may not have any at all}, and also factoring in the important things like car payments, cell phone bills, cable, gas, food, and projected bills like electricity, gas, and sewer. You can call your local gas and electric companies to get an estimate of what you may be paying ahead of time. Do this. After you factor in all those necessities, make sure that you leave yourself room to actually live. 

2. Stick to what you can afford. Very important. You have made a spreadsheet, you have calculated your finances, you have crossed your t's and dotted your i's, and then you find yourself on the website looking at slightly higher priced homes that get you to fall in love and somehow convince you that you can wiggle some numbers around. Don't do it! Trust me, it's tempting to want to compare and see what is out there, but believe me when I say this: no good will come of it. It will only make you want something that you know you shouldn't have. Don't be Adam and Eve.

3. Check your credit. Make sure that before starting this process you are aware of your credit score, any dings on your credit history, and any open accounts that you may not be aware of. Something I found out while we were applying for our loan is that my parent's mortgage popped up on my credit history because my mom had {before I was married} the same exact name {I share a first name with her as well}, and we obviously lived at the same home. Even though we had different social securities numbers, it still looked like I had a mortgage already out on my name and it took a couple of days for them to confirm that it was not in fact me. During your application process, the lenders will look closely at all these numbers and your credit score will be very important in telling them how much a risk you are and your probability of affording the mortgage and paying it off on time. If there are any questions, discrepancies to clear up, or credit cards you can pay off, do so before you start. It will make things go much smoother, and not to mention, faster.

4. If you can, put 20 percent down. We didn't have this sort of cash, and as a result we had to pay a fee which was known as "mortgage insurance." Essentially it gives the mortgage company a little cushion when taking on a risk with someone that cannot bring as much to the table. Unfortunately for us, and you, it meant that we had to add on $50 every month to do so. With our next home, we won't have that problem, but it's often the case with first time home buyers to have to pay mortgage insurance.

5. Ask your lender about closing costs. Every lender varies, and some have costs that others don't, so be sure to ask about your specific lender's closing costs and an estimate of what you will need to bring to the table to close. For us, we were able to negotiate with the seller to pay closing costs, but remember that is not always the case and these numbers are in the thousands.

6. Factor in renovations. Do you plan on doing remodeling right away? Even something as simple as painting multiple, if not all, rooms in the house can add up quickly. Do you want to buy perhaps a home that is below your price range and spend more money out of pocket making the changes that you want? Those are all things to consider, and those are all things that actually played into our first home. We stripped our house from top to bottom, and literally made it our own. I love that about it. It looks nothing like the day it did when we first opened the door, and I am so proud of the hard work and effort that went into making this home its best. Is it still done? Absolutely not. But when do house projects ever feel complete? 

 7.Think about the future. I know I mentioned looking at your finances at that present moment in time, but you need to also remember to look at the future. For us, I was pregnant. I knew that I would be working night shift and that I would not be relying on day care {that was our plan}, but I imagine that is not the case for many people. If you don't have kids and plan to have them in the future, think about the cost of day care {again in the thousand range}, and how that plays into what kind of home you can afford. Other things could include your need for possibly a new car down the road, or if you are planning on going back to school. And lastly, don't forget that homes also come with repairs. Often times, these repairs are not planned and they can be pretty costly. Plan for that and give yourself enough freedom to be able to afford unexpected expenses.

Are you ready to buy a home and want a resource to turn to?

The Capital One Home Loans Online Neighborhood is a free online resource about home buying with helpful articles and videos. You can also read about Capital One's Home Loans and the offers they have available.

Buying a home is an important step and certainly one that comes with challenges and great planning. Capital One's new online resource guides you ever step of the way with giving you all the home-buying terms to be familiar with, an overview of the loans available, and the documents you will need to apply for a loan.

I was selected for this opportunity as a member of Clever Girls and the content and opinions expressed here are all my own.


  1. Those are great tips to consider when one is looking to buy a new home. While it’s nice to look for that dream home right from the get-go, it’s always best to set a good expectation on what you can get for the budget you have. That way, you can focus on getting the best deal for a quality home, and not overstretch for a fixer-upper, only to find out that it needs more than a few renovations afterwards. Anyway, thanks for sharing your thoughts on the matter. Cheers!

    Tasha Reeves @ WCMTG


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